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The way they see it, if a service such as Morpheus and Grokster have to police its network, then there is little to stop other companies from having to police its products – or completely redesign them – to appease the entertainment industry.

In essence, if the Supreme Court reverses the Sony-Betamax decision, any technology product or service that potentially interacts with a copyrighted work would have to, by default, employ copy-protection technology.

That would be a reversal of the last 21 years of consumer-friendly media use, and it would likely derail an emerging business market.

The absence of stringent, court-mandated copy protection technology has allowed consumer rights – through the concept of fair use – to flourish. The Washington Post reported in January that the U.S. DVD market reached $15.8 billion in 2004, a jump of more than 30 percent over the previous year. That dwarfs the $9 billion motion picture box office industry.

Still, the entertainment industry believes the change is necessary. Despite the rapid growth in the DVD and VHS markets, their argument goes, digital recordings shared over computer networks allow piracy to run rampant, thus reducing the chance that any legitimate home video-type market will emerge.

So, the movie studios want to reverse the situation, making it the manufacturers’ responsibility to insure piracy doesn’t occur.

“A broad consensus has emerged around the conclusion that the Sony-Betamax decision was never meant to provide cover for Grokster-style theft,” Mitch Bainwol, Chairman and CEO, Recording Industry Association of America (RIAA), says in a written press release.

However, it’s also true that a broad consensus has emerged around the conclusion that the Sony-Betamax decision was absolutely meant to protect the creation of emerging – and oftentimes disruptive – technologies.
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“The copyright law principles set out in the Sony-Betamax case have served innovators, copyright industries, and the public well for 20 years,” says Fred von Lohmann, the Electronic Frontier Foundation’s senior intellectual property attorney. “We at EFF look forward to the Supreme Court reaffirming the applicability of Betamax in the 21st century.”

One member of TechNet, an influential technology industry lobbying group, has taken it upon itself to weigh in on the side of the defendants. Intel recently filed a friends-of-the-court letter, in which it expressed its concerns with Hollywood’s case.

“Intel is acutely aware of the importance of protecting copyrights as an incentive to creativity,” the company wrote in its amicus brief. But making manufacturers liable, it argues, “would chill innovation and stifle the development of new…products, including products designed to enhance lawful access to copyrighted works.”

(This article was amended on Saturday, March 12 to clarify the relationship between Streamcast Networks/Morpheus and Grokster. Initially, we reported that Streamcast was the parent company of Grokster. That is incorrect. They are separate entities that develop different P2P technologies. - Brad King)

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